Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | No | ☐ |
☒ | No | ☐ |
☒ | Accelerated Filer | ☐ | ||||||||||||
Non-accelerated Filer | ☐ | Smaller Reporting Company | ||||||||||||
Emerging Growth Company | ||||||||||||||
Yes | No | ☒ |
Page No. | |||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of sales | ( | ( | ( | ( | |||||||||||||||||||
GROSS PROFIT | |||||||||||||||||||||||
Selling, general and administrative | ( | ( | ( | ( | |||||||||||||||||||
Income from WABCO distribution termination | |||||||||||||||||||||||
Other operating expense, net | ( | ( | ( | ( | |||||||||||||||||||
OPERATING INCOME (LOSS) | ( | ||||||||||||||||||||||
Other income, net | |||||||||||||||||||||||
Equity in earnings of affiliates | ( | ||||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | ( | ||||||||||||||||||||||
Benefit (provision) for income taxes | ( | ( | ( | ||||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | ( | ||||||||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS, net of tax | |||||||||||||||||||||||
NET INCOME (LOSS) | ( | ||||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC. | $ | $ | ( | $ | $ | ||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC. | |||||||||||||||||||||||
Net income (loss) from continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
Income from discontinued operations | |||||||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
BASIC EARNINGS (LOSS) PER SHARE | |||||||||||||||||||||||
Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||
Basic earnings (loss) per share | $ | $ | ( | $ | $ | ||||||||||||||||||
DILUTED EARNINGS (LOSS) PER SHARE | |||||||||||||||||||||||
Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||
Diluted earnings (loss) per share | $ | $ | ( | $ | $ | ||||||||||||||||||
Basic average common shares outstanding | |||||||||||||||||||||||
Diluted average common shares outstanding |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||||||||
Attributable to Meritor, Inc. | ( | ||||||||||||||||||||||
Attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
Pension and other postretirement benefit related adjustments | |||||||||||||||||||||||
Unrealized gain (loss) on cash flow hedges | ( | ||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ||||||||||||||||||||||
Total comprehensive income (loss) | ( | ||||||||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
Comprehensive income (loss) attributable to Meritor, Inc. | $ | $ | ( | $ | $ |
June 30, 2021 | September 30, 2020 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Receivables, trade and other, net | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
TOTAL CURRENT ASSETS | |||||||||||
NET PROPERTY | |||||||||||
GOODWILL | |||||||||||
OTHER ASSETS | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
CURRENT LIABILITIES: | |||||||||||
Short-term debt | $ | $ | |||||||||
Accounts and notes payable | |||||||||||
Other current liabilities | |||||||||||
TOTAL CURRENT LIABILITIES | |||||||||||
LONG-TERM DEBT | |||||||||||
RETIREMENT BENEFITS | |||||||||||
OTHER LIABILITIES | |||||||||||
TOTAL LIABILITIES | |||||||||||
COMMITMENTS AND CONTINGENCIES (See Note 16) | |||||||||||
EQUITY: | |||||||||||
Common stock (June 30, 2021 and September 30, 2020, | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Treasury stock, at cost (June 30, 2021 and September 30, 2020, | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total equity attributable to Meritor, Inc. | |||||||||||
Noncontrolling interests | |||||||||||
TOTAL EQUITY | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | $ |
Nine Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
(Unaudited) | |||||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | $ | $ | |||||||||
Less: Income from discontinued operations, net of tax | |||||||||||
Income from continuing operations | |||||||||||
Adjustments to income from continuing operations to arrive at cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income tax expense (benefit) | ( | ||||||||||
Restructuring costs | |||||||||||
Stock compensation expense | |||||||||||
Equity in earnings of affiliates | ( | ( | |||||||||
Pension and retiree medical income | ( | ( | |||||||||
Loss on debt extinguishment | |||||||||||
Dividends received from equity method investments | |||||||||||
Pension and retiree medical contributions | ( | ( | |||||||||
Restructuring payments | ( | ( | |||||||||
Changes in off-balance sheet accounts receivable securitization and factoring programs | ( | ||||||||||
Changes in receivables, inventories and accounts payable | ( | ||||||||||
Changes in other current assets and liabilities | ( | ||||||||||
Changes in other assets and liabilities | |||||||||||
Operating cash flows provided by continuing operations | |||||||||||
Operating cash flows used for discontinued operations | |||||||||||
CASH PROVIDED BY OPERATING ACTIVITIES | |||||||||||
INVESTING ACTIVITIES | |||||||||||
Capital expenditures | ( | ( | |||||||||
Cash paid for acquisition of Transportation Power, Inc., net of cash acquired | ( | ||||||||||
Other investing activities | ( | ||||||||||
CASH USED FOR INVESTING ACTIVITIES | ( | ( | |||||||||
FINANCING ACTIVITIES | |||||||||||
Securitization | ( | ||||||||||
Borrowings against revolving line of credit | |||||||||||
Repayments of revolving line of credit | ( | ||||||||||
Redemption of notes | ( | ||||||||||
Proceeds from debt issuances | |||||||||||
Repurchase of convertible notes | ( | ||||||||||
Debt issuance costs | ( | ( | |||||||||
Term loan payments | ( | ( | |||||||||
Other financing activities | ( | ( | |||||||||
Net change in debt | ( | ||||||||||
Repurchase of common stock | ( | ( | |||||||||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | ( | ||||||||||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | ( | ||||||||||
CHANGE IN CASH AND CASH EQUIVALENTS | ( | ||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | |||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ |
Three months ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Equity Attributable to Meritor, Inc. | Noncontrolling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
Beginning Balance at March 31, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Repurchase of Common Stock | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Ending Balance at June 30, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Three months ended June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Equity Attributable to Meritor, Inc. | Noncontrolling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
Beginning Balance at March 31, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Equity based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Ending Balance at June 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ |
Nine months ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Equity Attributable to Meritor, Inc. | Noncontrolling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
Beginning Balance at September 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Vesting of equity based awards | ( | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Repurchase of convertible notes | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Noncontrolling interest dividend | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Other equity adjustments | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Ending Balance at June 30, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Nine Months Ended June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Equity Attributable to Meritor, Inc. | Noncontrolling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
Beginning Balance at September 30, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Equity based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Vesting of equity based awards | ( | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Noncontrolling interest dividend | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Ending Balance at June 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Basic average common shares outstanding | |||||||||||||||||||||||
Impact of restricted shares, restricted share units and performance share units | |||||||||||||||||||||||
Impact of convertible notes | |||||||||||||||||||||||
Diluted average common shares outstanding (1) |
Three Months Ended June 30, 2021 | ||||||||||||||||||||
Primary Geographical Market | Commercial Truck | Aftermarket & Industrial | Total | |||||||||||||||||
U.S. | $ | $ | $ | |||||||||||||||||
Canada | ||||||||||||||||||||
Mexico | ||||||||||||||||||||
Total North America | ||||||||||||||||||||
Sweden | ||||||||||||||||||||
Italy | ||||||||||||||||||||
United Kingdom | ||||||||||||||||||||
Other Europe | ||||||||||||||||||||
Total Europe | ||||||||||||||||||||
Brazil | ||||||||||||||||||||
China | ||||||||||||||||||||
India | ||||||||||||||||||||
Other Asia-Pacific | ||||||||||||||||||||
Total sales | $ | $ | $ |
Three Months Ended June 30, 2020 | ||||||||||||||||||||
Primary Geographical Market | Commercial Truck | Aftermarket & Industrial | Total | |||||||||||||||||
U.S. | $ | $ | $ | |||||||||||||||||
Canada | ||||||||||||||||||||
Mexico | ||||||||||||||||||||
Total North America | ||||||||||||||||||||
Sweden | ||||||||||||||||||||
Italy | ||||||||||||||||||||
United Kingdom | ||||||||||||||||||||
Other Europe | ||||||||||||||||||||
Total Europe | ||||||||||||||||||||
Brazil | ||||||||||||||||||||
China | ||||||||||||||||||||
India | ||||||||||||||||||||
Other Asia-Pacific | ||||||||||||||||||||
Total sales | $ | $ | $ |
Nine Months Ended June 30, 2021 | ||||||||||||||||||||
Primary Geographical Market | Commercial Truck | Aftermarket & Industrial | Total | |||||||||||||||||
U.S. | $ | $ | $ | |||||||||||||||||
Canada | ||||||||||||||||||||
Mexico | ||||||||||||||||||||
Total North America | ||||||||||||||||||||
Sweden | ||||||||||||||||||||
Italy | ||||||||||||||||||||
United Kingdom | ||||||||||||||||||||
Other Europe | ||||||||||||||||||||
Total Europe | ||||||||||||||||||||
Brazil | ||||||||||||||||||||
China | ||||||||||||||||||||
India | ||||||||||||||||||||
Other Asia-Pacific | ||||||||||||||||||||
Total sales | $ | $ | $ |
Nine Months Ended June 30, 2020 | ||||||||||||||||||||
Primary Geographical Market | Commercial Truck | Aftermarket & Industrial | Total | |||||||||||||||||
U.S. | $ | $ | $ | |||||||||||||||||
Canada | ||||||||||||||||||||
Mexico | ||||||||||||||||||||
Total North America | ||||||||||||||||||||
Sweden | ||||||||||||||||||||
Italy | ||||||||||||||||||||
United Kingdom | ||||||||||||||||||||
Other Europe | ||||||||||||||||||||
Total Europe | ||||||||||||||||||||
Brazil | ||||||||||||||||||||
China | ||||||||||||||||||||
India | ||||||||||||||||||||
Other Asia-Pacific | ||||||||||||||||||||
Total sales | $ | $ | $ |
Employee Termination Benefits | Plant Shutdown & Other | Total | |||||||||||||||
Balance at September 30, 2020 | $ | $ | $ | ||||||||||||||
Activity during the period: | |||||||||||||||||
Charges | |||||||||||||||||
Cash payments | ( | ( | |||||||||||||||
Other | ( | ( | |||||||||||||||
Total restructuring reserves at June 30, 2021 | |||||||||||||||||
Less: non-current restructuring reserves | ( | ( | |||||||||||||||
Restructuring reserves – current, at June 30, 2021 | $ | $ | $ | ||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | ||||||||||||||
Activity during the period: | |||||||||||||||||
Charges | |||||||||||||||||
Cash payments | ( | ( | |||||||||||||||
Total restructuring reserves at June 30, 2020 | |||||||||||||||||
Less: non-current restructuring reserves | |||||||||||||||||
Restructuring reserves – current, at June 30, 2020 | $ | $ | $ |
Current Expiration | Total Facility Size as of 6/30/21 | Utilized as of 6/30/21 | Utilized as of 9/30/20 | |||||||||||||||||||||||||||||||||||||||||
EUR | USD | EUR | USD | EUR | USD | |||||||||||||||||||||||||||||||||||||||
On-balance sheet arrangement | ||||||||||||||||||||||||||||||||||||||||||||
Committed U.S. accounts receivable securitization (1) | March 2024 | N/A | $ | N/A | $ | N/A | $ | |||||||||||||||||||||||||||||||||||||
Total on-balance sheet arrangement: (1) | N/A | $ | N/A | $ | N/A | $ | ||||||||||||||||||||||||||||||||||||||
Off-balance sheet arrangements | ||||||||||||||||||||||||||||||||||||||||||||
Committed Swedish factoring facility (2)(3) | March 2024 | € | $ | € | $ | € | $ | |||||||||||||||||||||||||||||||||||||
Committed U.S. factoring facility (2) | February 2023 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||
Uncommitted U.K. factoring facility | February 2022 | |||||||||||||||||||||||||||||||||||||||||||
Uncommitted Italy factoring facility | June 2022 | |||||||||||||||||||||||||||||||||||||||||||
Other uncommitted factoring facilities (4) | None | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||
Total off-balance sheet arrangements | € | $ | € | $ | € | $ |
June 30, 2021 | September 30, 2020 | ||||||||||
Finished goods | $ | $ | |||||||||
Work in process | |||||||||||
Raw materials, parts and supplies | |||||||||||
Total | $ | $ |
June 30, 2021 | September 30, 2020 | ||||||||||
Property at cost: | |||||||||||
Land and land improvements | $ | $ | |||||||||
Buildings | |||||||||||
Machinery and equipment | |||||||||||
Company-owned tooling | |||||||||||
Construction in progress | |||||||||||
Total | |||||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Net property | $ | $ |
June 30, 2021 | September 30, 2020 | ||||||||||
Prepaid pension costs | $ | $ | |||||||||
Deferred income tax assets | |||||||||||
Investments in non-consolidated joint ventures | |||||||||||
Other | |||||||||||
Other assets | $ | $ |
June 30, 2021 | September 30, 2020 | ||||||||||
Compensation and benefits | $ | $ | |||||||||
Product warranties | |||||||||||
Other | |||||||||||
Other current liabilities | $ | $ |
Nine Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
Total product warranties – beginning of period | $ | $ | |||||||||
Accruals for product warranties | |||||||||||
Payments | ( | ( | |||||||||
Change in estimates and other | ( | ( | |||||||||
Total product warranties – end of period | |||||||||||
Less: non-current product warranties | ( | ( | |||||||||
Product warranties – current | $ | $ |
June 30, 2021 | September 30, 2020 | ||||||||||
Asbestos-related liabilities (see Note 16) | $ | $ | |||||||||
Liabilities for uncertain tax positions | |||||||||||
Product warranties (see Note 11) | |||||||||||
Other | |||||||||||
Other liabilities | $ | $ |
June 30, 2021 | September 30, 2020 | ||||||||||
$ | $ | ||||||||||
Term loan due 2024 | |||||||||||
Finance lease obligation | |||||||||||
Unamortized discount on convertible notes | ( | ( | |||||||||
Subtotal | |||||||||||
Less: short-term debt | ( | ( | |||||||||
Long-term debt | $ | $ |
Year | Redemption Price | |||||||
2023 | % | |||||||
2024 | % | |||||||
2025 and thereafter | % |
June 30, 2021 | September 30, 2020 | ||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Short-term debt | |||||||||||||||||||||||
Long-term debt | |||||||||||||||||||||||
Foreign currency option contracts (other assets) | |||||||||||||||||||||||
Foreign exchange forward contracts (other assets) | |||||||||||||||||||||||
Foreign exchange forward contracts (other liabilities) | |||||||||||||||||||||||
June 30, 2021 | September 30, 2020 | ||||||||||||||||||||||||||||||||||
Gross Amounts Recognized | Gross Amounts Offset | Net Amounts Reported | Gross Amounts Recognized | Gross Amounts Offset | Net Amounts Reported | ||||||||||||||||||||||||||||||
Derivative Assets | |||||||||||||||||||||||||||||||||||
Foreign currency option contracts | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Foreign exchange forward contracts | |||||||||||||||||||||||||||||||||||
Derivative Liabilities | |||||||||||||||||||||||||||||||||||
Foreign exchange forward contracts | |||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Short-term debt | |||||||||||||||||
Long-term debt | |||||||||||||||||
Foreign exchange forward contracts (other assets) | |||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Short-term debt | |||||||||||||||||
Long-term debt | |||||||||||||||||
Foreign exchange forward contracts (other liabilities) | |||||||||||||||||
Foreign currency option contracts (other assets) | |||||||||||||||||
June 30, 2021 | September 30, 2020 | ||||||||||
Retiree medical liability | $ | $ | |||||||||
Pension liability | |||||||||||
Other | |||||||||||
Subtotal | |||||||||||
Less: current portion (included in compensation and benefits, Note 11) | ( | ( | |||||||||
Retirement benefits | $ | $ |
2021 | 2020 | ||||||||||||||||||||||
Pension | Retiree Medical | Pension | Retiree Medical | ||||||||||||||||||||
Interest cost | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Assumed return on plan assets | |||||||||||||||||||||||
Amortization of prior service benefit | |||||||||||||||||||||||
Recognized actuarial loss | ( | ( | ( | ( | |||||||||||||||||||
Total income | $ | $ | $ | $ |
2021 | 2020 | ||||||||||||||||||||||
Pension | Retiree Medical | Pension | Retiree Medical | ||||||||||||||||||||
Interest cost | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Assumed return on plan assets | |||||||||||||||||||||||
Amortization of prior service benefit | |||||||||||||||||||||||
Recognized actuarial loss | ( | ( | ( | ( | |||||||||||||||||||
Total income | $ | $ | $ | $ |
Superfund Sites | Non-Superfund Sites | Total | |||||||||||||||
Beginning Balance at September 30, 2020 | $ | $ | $ | ||||||||||||||
Payments and other | ( | ( | ( | ||||||||||||||
Accruals | |||||||||||||||||
Ending Balance at June 30, 2021 | $ | $ | $ |
Foreign Currency Translation | Employee Benefit Related Adjustments | Unrealized Income (Loss) on cash flow hedges | Total | ||||||||||||||||||||
Balance at March 31, 2021 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income before reclassification | |||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
Net current-period other comprehensive income | |||||||||||||||||||||||
Balance at June 30, 2021 | $ | ( | $ | ( | $ | ( | $ | ( |
Details about Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income | Affected Line Item in the Consolidated Statement of Operations | ||||||||||||
Employee Benefit Related Adjustment | ||||||||||||||
Prior service benefit | $ | ( | (a) | |||||||||||
Actuarial losses | (a) | |||||||||||||
Total before tax | ||||||||||||||
Tax benefit | ||||||||||||||
Total reclassifications for the period | $ | Net of tax | ||||||||||||
Foreign Currency Translation | Employee Benefit Related Adjustments | Unrealized Income (Loss) on cash flow hedges | Total | ||||||||||||||||||||
Balance at March 31, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income before reclassification | |||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
Net current-period other comprehensive income | |||||||||||||||||||||||
Balance at June 30, 2020 | $ | ( | $ | ( | $ | ( | $ | ( |
Details about Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income | Affected Line Item in the Consolidated Statement of Operations | ||||||||||||
Employee Benefit Related Adjustment | ||||||||||||||
Prior service benefit | $ | ( | (b) | |||||||||||
Actuarial losses | (b) | |||||||||||||
Total before tax | ||||||||||||||
Tax benefit | ||||||||||||||
Total reclassifications for the period | $ | Net of tax | ||||||||||||
Foreign Currency Translation | Employee Benefit Related Adjustments | Unrealized Income (Loss) on cash flow hedges | Total | ||||||||||||||||||||
Balance at September 30, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income before reclassification | |||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
Net current-period other comprehensive income | |||||||||||||||||||||||
Balance at June 30, 2021 | $ | ( | $ | ( | $ | ( | $ | ( |
Details about Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income | Affected Line Item in the Consolidated Statement of Operations | ||||||||||||
Employee Benefit Related Adjustment | ||||||||||||||
Prior service benefit | $ | ( | (a) | |||||||||||
Actuarial losses | (a) | |||||||||||||
Total before tax | ||||||||||||||
Tax benefit | ||||||||||||||
Total reclassifications for the period | $ | Net of tax | ||||||||||||
Foreign Currency Translation | Employee Benefit Related Adjustments | Unrealized Income (Loss) on cash flow hedges | Total | ||||||||||||||||||||
Balance at September 30, 2019 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income before reclassification | ( | ( | ( | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
Net current-period other comprehensive income | ( | ( | ( | ||||||||||||||||||||
Balance at June 30, 2020 | $ | ( | $ | ( | $ | ( | $ | ( |
Details about Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income | Affected Line Item in the Consolidated Statement of Operations | ||||||||||||
Employee Benefit Related Adjustment | ||||||||||||||
Prior service benefit | $ | ( | (b) | |||||||||||
Actuarial losses | (b) | |||||||||||||
Total before tax | ||||||||||||||
Tax benefit | ||||||||||||||
Total reclassifications for the period | $ | Net of tax | ||||||||||||
Commercial Truck | Aftermarket & Industrial | Eliminations | Total | ||||||||||||||||||||
Three Months Ended June 30, 2021 | |||||||||||||||||||||||
External Sales | $ | $ | $ | — | $ | ||||||||||||||||||
Intersegment Sales | ( | — | |||||||||||||||||||||
Total Sales | $ | $ | $ | ( | $ | ||||||||||||||||||
Three Months Ended June 30, 2020 | |||||||||||||||||||||||
External Sales | $ | $ | $ | — | $ | ||||||||||||||||||
Intersegment Sales | ( | — | |||||||||||||||||||||
Total Sales | $ | $ | $ | ( | $ | ||||||||||||||||||
Commercial Truck | Aftermarket & Industrial | Eliminations | Total | ||||||||||||||||||||
Nine Months Ended June 30, 2021 | |||||||||||||||||||||||
External Sales | $ | $ | $ | — | $ | ||||||||||||||||||
Intersegment Sales | ( | — | |||||||||||||||||||||
Total Sales | $ | $ | $ | ( | $ | ||||||||||||||||||
Nine Months Ended June 30, 2020 | |||||||||||||||||||||||
External Sales | $ | $ | $ | — | $ | ||||||||||||||||||
Intersegment Sales | ( | — | |||||||||||||||||||||
Total Sales | $ | $ | $ | ( | $ |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Segment adjusted EBITDA: | |||||||||||||||||||||||
Commercial Truck | $ | $ | ( | $ | $ | ||||||||||||||||||
Aftermarket & Industrial | |||||||||||||||||||||||
Segment adjusted EBITDA | |||||||||||||||||||||||
Unallocated legacy and corporate income (expense), net (1) | ( | ||||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
Benefit (provision) for income taxes | ( | ( | ( | ||||||||||||||||||||
Depreciation and amortization | ( | ( | ( | ( | |||||||||||||||||||
Noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
Loss on sale of receivables | ( | ( | ( | ( | |||||||||||||||||||
Restructuring | ( | ( | ( | ( | |||||||||||||||||||
Brazil VAT Credit (2) | |||||||||||||||||||||||
Transaction costs | ( | ||||||||||||||||||||||
Income from WABCO distribution termination | |||||||||||||||||||||||
Income (loss) from continuing operations attributable to Meritor, Inc. | $ | $ | ( | $ | $ |
June 30, 2021 | September 30, 2020 | ||||||||||
Segment Assets: | |||||||||||
Commercial Truck | $ | $ | |||||||||
Aftermarket & Industrial | |||||||||||
Total segment assets | |||||||||||
Corporate (1) | |||||||||||
Less: Accounts receivable sold under off-balance sheet factoring programs (2) | ( | ( | |||||||||
Total assets | $ | $ |
Three Months Ended June 30, | Percent | Nine Months Ended June 30, | Percent | ||||||||||||||||||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||
Estimated Commercial Truck production (in thousands): | |||||||||||||||||||||||||||||||||||
North America, Heavy-Duty Trucks | 67 | 28 | 139 | % | 201 | 159 | 26 | % | |||||||||||||||||||||||||||
North America, Medium-Duty Trucks | 59 | 37 | 59 | % | 181 | 157 | 15 | % | |||||||||||||||||||||||||||
North America, Trailers | 66 | 46 | 43 | % | 182 | 183 | (1) | % | |||||||||||||||||||||||||||
Western Europe, Heavy- and Medium-Duty Trucks | 101 | 53 | 91 | % | 323 | 257 | 26 | % | |||||||||||||||||||||||||||
South America, Heavy- and Medium-Duty Trucks | 41 | 19 | 116 | % | 107 | 71 | 51 | % | |||||||||||||||||||||||||||
India, Heavy- and Medium-Duty Trucks | 31 | 7 | 343 | % | 174 | 98 | 78 | % |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 (3) | 2021 | 2020 (3) | ||||||||||||||||||||
Income (loss) from continuing operations attributable to the company | $ | 42 | $ | (36) | $ | 137 | $ | 243 | |||||||||||||||
Restructuring | 1 | 12 | 9 | 27 | |||||||||||||||||||
Loss on debt extinguishment | 3 | — | 11 | — | |||||||||||||||||||
Income from WABCO distribution termination | — | — | — | (265) | |||||||||||||||||||
Brazil value added tax (VAT) Credit (1) | — | — | (22) | — | |||||||||||||||||||
Transaction costs | — | — | — | 5 | |||||||||||||||||||
Tax effect of adjustments (2) | (1) | (2) | 3 | 55 | |||||||||||||||||||
Adjusted income (loss) from continuing operations attributable to the company | $ | 45 | $ | (26) | $ | 138 | $ | 65 | |||||||||||||||
Diluted earnings (loss) per share from continuing operations | $ | 0.58 | $ | (0.50) | $ | 1.87 | $ | 3.19 | |||||||||||||||
Impact of adjustments on diluted earnings per share | 0.04 | 0.14 | 0.02 | (2.34) | |||||||||||||||||||
Adjusted diluted earnings (loss) per share from continuing operations | $ | 0.62 | $ | (0.36) | $ | 1.89 | $ | 0.85 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Cash provided by (used for) operating activities | $ | 39 | $ | (102) | $ | 146 | $ | 188 | |||||||||||||||
Capital expenditures | (21) | (12) | (47) | (45) | |||||||||||||||||||
Free cash flow | $ | 18 | $ | (114) | $ | 99 | $ | 143 | |||||||||||||||
Free cash flow / Net income from continuing operations attributable to the company | 43 | % | N/A | 72 | % | 59 | % | ||||||||||||||||
Free cash flow conversion (Free cash flow / Adjusted income from continuing operations attributable to the company) | 40 | % | N/A | 72 | % | 220 | % |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income (loss) attributable to Meritor, Inc. | $ | 42 | $ | (36) | $ | 137 | $ | 244 | |||||||||||||||
Income from discontinued operations, net of tax, attributable to Meritor, Inc. | — | — | — | (1) | |||||||||||||||||||
Income (loss) from continuing operations, net of tax, attributable to Meritor, Inc. | $ | 42 | $ | (36) | $ | 137 | $ | 243 | |||||||||||||||
Interest expense, net | 20 | 17 | 65 | 47 | |||||||||||||||||||
Provision (benefit) for income taxes | 14 | (13) | 43 | 73 | |||||||||||||||||||
Depreciation and amortization | 26 | 24 | 78 | 74 | |||||||||||||||||||
Noncontrolling interests | 3 | 2 | 7 | 5 | |||||||||||||||||||
Loss on sale of receivables | 1 | 1 | 3 | 3 | |||||||||||||||||||
Restructuring | 1 | 12 | 9 | 27 | |||||||||||||||||||
Transaction costs | — | — | — | 5 | |||||||||||||||||||
Income from WABCO distribution termination | — | — | — | (265) | |||||||||||||||||||
Brazil VAT Credit (1) | — | — | (22) | — | |||||||||||||||||||
Adjusted EBITDA | $ | 107 | $ | 7 | $ | 320 | $ | 212 | |||||||||||||||
Adjusted EBITDA margin (2) | 10.5 | % | 1.4 | % | 11.1 | % | 9.3 | % | |||||||||||||||
Unallocated legacy and corporate expense (income), net (3) | (2) | 1 | (10) | (4) | |||||||||||||||||||
Segment adjusted EBITDA | $ | 105 | $ | 8 | $ | 310 | $ | 208 | |||||||||||||||
Commercial Truck | |||||||||||||||||||||||
Segment adjusted EBITDA | $ | 69 | $ | (23) | $ | 205 | $ | 92 | |||||||||||||||
Segment adjusted EBITDA margin (4) | 8.6 | % | (6.8) | % | 9.0 | % | 5.6 | % | |||||||||||||||
Aftermarket & Industrial | |||||||||||||||||||||||
Segment adjusted EBITDA | $ | 36 | $ | 31 | 105 | $ | 116 | ||||||||||||||||
Segment adjusted EBITDA margin (4) | 14.0 | % | 15.3 | % | 14.2 | % | 15.4 | % |
Three Months Ended June 30, | Dollar Change Due To | ||||||||||||||||||||||||||||||||||
2021 | 2020 | Dollar Change | % Change | Currency | Volume/ Other | ||||||||||||||||||||||||||||||
Sales: | |||||||||||||||||||||||||||||||||||
Commercial Truck | |||||||||||||||||||||||||||||||||||
North America | $ | 414 | $ | 164 | $ | 250 | 152 | % | $ | — | $ | 250 | |||||||||||||||||||||||
Europe | 166 | 70 | 96 | 137 | % | 14 | 82 | ||||||||||||||||||||||||||||
South America | 82 | 21 | 61 | 290 | % | 2 | 59 | ||||||||||||||||||||||||||||
China | 41 | 41 | — | — | % | 4 | (4) | ||||||||||||||||||||||||||||
India | 30 | 5 | 25 | 500 | % | 1 | 24 | ||||||||||||||||||||||||||||
Other | 31 | 14 | 17 | 121 | % | 2 | 15 | ||||||||||||||||||||||||||||
Total External Sales | $ | 764 | $ | 315 | $ | 449 | 143 | % | $ | 23 | $ | 426 | |||||||||||||||||||||||
Intersegment Sales | 36 | 21 | 15 | 71 | % | 5 | 10 | ||||||||||||||||||||||||||||
Total Sales | $ | 800 | $ | 336 | $ | 464 | 138 | % | $ | 28 | $ | 436 | |||||||||||||||||||||||
Aftermarket & Industrial | |||||||||||||||||||||||||||||||||||
North America | $ | 205 | $ | 164 | $ | 41 | 25 | % | $ | 3 | $ | 38 | |||||||||||||||||||||||
Europe | 46 | 33 | 13 | 39 | % | 4 | 9 | ||||||||||||||||||||||||||||
Other | 1 | 2 | (1) | N/A | — | (1) | |||||||||||||||||||||||||||||
Total External Sales | $ | 252 | $ | 199 | $ | 53 | 27 | % | $ | 7 | $ | 46 | |||||||||||||||||||||||
Intersegment Sales | 6 | 4 | 2 | 50 | % | 2 | — | ||||||||||||||||||||||||||||
Total Sales | $ | 258 | $ | 203 | $ | 55 | 27 | % | $ | 9 | $ | 46 | |||||||||||||||||||||||
Total External Sales | $ | 1,016 | $ | 514 | $ | 502 | 98 | % | $ | 30 | $ | 472 |
Three Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Dollar Change | % Change | ||||||||||||||||||||
Sales | $ | 1,016 | $ | 514 | $ | 502 | 98 | % | |||||||||||||||
Cost of sales | (884) | (486) | 398 | 82 | % | ||||||||||||||||||
GROSS PROFIT | 132 | 28 | 104 | 371 | % | ||||||||||||||||||
Selling, general and administrative | (69) | (52) | 17 | 33 | % | ||||||||||||||||||
Income from WABCO distribution termination | — | — | — | N/A | |||||||||||||||||||
Other operating expense, net | (4) | (17) | (13) | (76) | % | ||||||||||||||||||
Other income, net | 12 | 12 | — | — | % | ||||||||||||||||||
Equity in earnings of affiliates | 8 | (1) | 9 | (900) | % | ||||||||||||||||||
Interest expense, net | (20) | (17) | 3 | 18 | % | ||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 59 | (47) | 106 | (226) | % | ||||||||||||||||||
Benefit (provision) for income taxes | (14) | 13 | 27 | (208) | % | ||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | 45 | (34) | 79 | (232) | % | ||||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS, net of tax | — | — | — | N/A | |||||||||||||||||||
NET INCOME (LOSS) | 45 | (34) | 79 | (232) | % | ||||||||||||||||||
Less: Net income attributable to noncontrolling interests | (3) | (2) | 1 | (50) | % | ||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC. | $ | 42 | $ | (36) | $ | 78 | (217) | % |
Segment adjusted EBITDA | Segment adjusted EBITDA margins | ||||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||
Commercial Truck | $ | 69 | $ | (23) | $ | 92 | 8.6 | % | (6.8) | % | 15.40 | pts | |||||||||||||||||||||||
Aftermarket & Industrial | 36 | 31 | 5 | 14.0 | % | 15.3 | % | (1.30) | pts | ||||||||||||||||||||||||||
Segment adjusted EBITDA | $ | 105 | $ | 8 | $ | 97 | 10.3 | % | 1.6 | % | 8.70 | pts |
Commercial Truck | Aftermarket & Industrial | TOTAL | |||||||||||||||
Segment adjusted EBITDA – Quarter ended June 30, 2020 | $ | (23) | $ | 31 | $ | 8 | |||||||||||
Higher short-and long-term variable compensation | (7) | (3) | (10) | ||||||||||||||
Higher earnings from unconsolidated affiliates | 9 | — | 9 | ||||||||||||||
Impact of foreign currency exchange rates | 8 | 1 | 9 | ||||||||||||||
Volume, mix, pricing and other | 82 | 7 | 89 | ||||||||||||||
Segment adjusted EBITDA – Quarter ended June 30, 2021 | $ | 69 | $ | 36 | $ | 105 |
Nine Months Ended June 30, | Dollar Change Due To | ||||||||||||||||||||||||||||||||||
2021 | 2020 | Dollar Change | % Change | Currency | Volume/ Other | ||||||||||||||||||||||||||||||
Sales: | |||||||||||||||||||||||||||||||||||
Commercial Truck | |||||||||||||||||||||||||||||||||||
North America | $ | 1,141 | $ | 877 | $ | 264 | 30 | % | $ | — | $ | 264 | |||||||||||||||||||||||
Europe | 510 | 351 | 159 | 45 | % | 43 | 116 | ||||||||||||||||||||||||||||
South America | 219 | 124 | 95 | 77 | % | (33) | 128 | ||||||||||||||||||||||||||||
China | 105 | 101 | 4 | 4 | % | 9 | (5) | ||||||||||||||||||||||||||||
India | 113 | 49 | 64 | 131 | % | (1) | 65 | ||||||||||||||||||||||||||||
Other | 78 | 42 | 36 | 86 | % | 5 | 31 | ||||||||||||||||||||||||||||
Total External Sales | $ | 2,166 | $ | 1,544 | $ | 622 | 40 | % | $ | 23 | $ | 599 | |||||||||||||||||||||||
Intersegment Sales | 102 | 86 | 16 | 19 | % | 10 | 6 | ||||||||||||||||||||||||||||
Total Sales | $ | 2,268 | $ | 1,630 | $ | 638 | 39 | % | $ | 33 | $ | 605 | |||||||||||||||||||||||
Aftermarket & Industrial | |||||||||||||||||||||||||||||||||||
North America | $ | 588 | $ | 620 | $ | (32) | (5) | % | $ | 3 | $ | (35) | |||||||||||||||||||||||
Europe | 131 | 118 | 13 | 11 | % | 10 | 3 | ||||||||||||||||||||||||||||
Other | 3 | 4 | (1) | (25) | % | — | (1) | ||||||||||||||||||||||||||||
Total External Sales | $ | 722 | $ | 742 | $ | (20) | (3) | % | $ | 13 | $ | (33) | |||||||||||||||||||||||
Intersegment Sales | 17 | 13 | 4 | 31 | % | 6 | (2) | ||||||||||||||||||||||||||||
Total Sales | $ | 739 | $ | 755 | $ | (16) | (2) | % | $ | 19 | $ | (35) | |||||||||||||||||||||||
Total External Sales | $ | 2,888 | $ | 2,286 | $ | 602 | 26 | % | $ | 36 | $ | 566 |
Nine Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Dollar Change | % Change | ||||||||||||||||||||
Sales | $ | 2,888 | $ | 2,286 | $ | 602 | 26 | % | |||||||||||||||
Cost of sales | (2,493) | (2,017) | 476 | 24 | % | ||||||||||||||||||
GROSS PROFIT | 395 | 269 | 126 | 47 | % | ||||||||||||||||||
Selling, general and administrative | (203) | (181) | 22 | 12 | % | ||||||||||||||||||
Income from WABCO distribution termination | — | 265 | (265) | N/A | |||||||||||||||||||
Other operating expense, net | (13) | (32) | (19) | (59) | % | ||||||||||||||||||
Other income, net | 49 | 36 | 13 | 36 | % | ||||||||||||||||||
Equity in earnings of affiliates | 24 | 11 | 13 | 118 | % | ||||||||||||||||||
Interest expense, net | (65) | (47) | 18 | 38 | % | ||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 187 | 321 | (134) | (42) | % | ||||||||||||||||||
Benefit (provision) for income taxes | (43) | (73) | (30) | (41) | % | ||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | 144 | 248 | (104) | (42) | % | ||||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS, net of tax | — | 1 | (1) | 100 | % | ||||||||||||||||||
NET INCOME (LOSS) | 144 | 249 | (105) | (42) | % | ||||||||||||||||||
Less: Net income attributable to noncontrolling interests | (7) | (5) | 2 | 40 | % | ||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC. | $ | 137 | $ | 244 | $ | (107) | (44) | % |
Segment adjusted EBITDA | Segment adjusted EBITDA margins | ||||||||||||||||||||||||||||||||||
Nine Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||
Commercial Truck | $ | 205 | $ | 92 | $ | 113 | 9.0 | % | 5.6 | % | 3.4 | pts | |||||||||||||||||||||||
Aftermarket & Industrial | 105 | 116 | (11) | 14.2 | % | 15.4 | % | (1.2) | pts | ||||||||||||||||||||||||||
Segment adjusted EBITDA | $ | 310 | $ | 208 | $ | 102 | 10.7 | % | 9.1 | % | 1.6 | pts |
Commercial Truck | Aftermarket & Industrial | TOTAL | |||||||||||||||
Segment adjusted EBITDA - Nine Months Ended June 30, 2020 | $ | 92 | $ | 116 | $ | 208 | |||||||||||
Higher short-and long-term variable compensation | (25) | (9) | (34) | ||||||||||||||
Higher earnings from unconsolidated affiliates | 13 | — | 13 | ||||||||||||||
Impact of foreign currency exchange rates | (5) | 5 | — | ||||||||||||||
Volume, mix, pricing and other | 130 | (7) | 123 | ||||||||||||||
Segment adjusted EBITDA - Nine Months Ended June 30, 2021 | $ | 205 | $ | 105 | $ | 310 |
Nine Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
OPERATING CASH FLOWS | |||||||||||
Income from continuing operations | $ | 144 | $ | 248 | |||||||
Depreciation and amortization | 78 | 74 | |||||||||
Deferred income tax expense (benefit) | 1 | (4) | |||||||||
Restructuring costs | 9 | 27 | |||||||||
Stock compensation expense | 14 | 3 | |||||||||
Equity in earnings of affiliates | (24) | (11) | |||||||||
Pension and retiree medical income | (39) | (31) | |||||||||
Loss on debt extinguishment | 11 | — | |||||||||
Dividends received from equity method investments | 7 | 8 | |||||||||
Pension and retiree medical contributions | (8) | (11) | |||||||||
Restructuring payments | (11) | (21) | |||||||||
Changes in receivables, inventories and accounts payable | (103) | 11 | |||||||||
Changes in off-balance sheet accounts receivable factoring | 35 | (104) | |||||||||
Changes in other current assets and liabilities | 26 | (26) | |||||||||
Changes in other assets and liabilities | 6 | 25 | |||||||||
Cash flows provided by continuing operations | 146 | 188 | |||||||||
Cash flows used for discontinued operations | — | — | |||||||||
CASH PROVIDED BY OPERATING ACTIVITIES | $ | 146 | $ | 188 |
Nine Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
INVESTING CASH FLOWS | |||||||||||
Capital expenditures | $ | (47) | $ | (45) | |||||||
Cash paid for acquisition of TransPower, net of cash acquired | — | (13) | |||||||||
Other investing activities | (3) | 9 | |||||||||
CASH USED FOR INVESTING ACTIVITIES | $ | (50) | $ | (49) |
Nine Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
FINANCING CASH FLOWS | |||||||||||
Securitization | $ | — | $ | (8) | |||||||
Borrowings against revolving line of credit | — | 304 | |||||||||
Repayments of revolving line of credit | — | (304) | |||||||||
Proceeds from debt issuance | 275 | 300 | |||||||||
Redemption of notes | (458) | — | |||||||||
Repurchase of convertible notes | (53) | — | |||||||||
Debt issuance costs | (5) | (4) | |||||||||
Term loan payments | (9) | (6) | |||||||||
Other financing activities | (1) | (1) | |||||||||
Net change in debt | (251) | 281 | |||||||||
Repurchase of common stock | (25) | (241) | |||||||||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | $ | (276) | $ | 40 |
June 30, 2021 | September 30, 2020 | ||||||||||
Fixed-rate debt securities | $ | 566 | $ | 741 | |||||||
Fixed-rate convertible notes | 321 | 343 | |||||||||
Unamortized discount on convertible notes | (25) | (29) | |||||||||
Term loan | 157 | 166 | |||||||||
Other borrowings | 11 | 6 | |||||||||
Total debt | $ | 1,030 | $ | 1,227 |
Total Facility Size | Utilized as of 6/30/2021 | Readily Available as of 6/30/2021 | Current Expiration | ||||||||||||||||||||
On-balance sheet arrangements: | |||||||||||||||||||||||
Senior secured revolving credit facility (1) | $ | 685 | $ | — | $ | 499 | June 2024 (1) | ||||||||||||||||
Committed U.S. accounts receivable securitization (2) | 110 | 3 | 107 | March 2024 | |||||||||||||||||||
Total on-balance sheet arrangements | $ | 795 | $ | 3 | $ | 606 | |||||||||||||||||
Off-balance sheet arrangements: (2) | |||||||||||||||||||||||
Committed Swedish factoring facility (3)(4) | $ | 184 | $ | 95 | $ | — | March 2024 | ||||||||||||||||
Committed U.S. factoring facility (3) | 75 | 48 | — | February 2023 | |||||||||||||||||||
Uncommitted U.K. factoring facility | 30 | 8 | — | February 2022 | |||||||||||||||||||
Uncommitted Italy factoring facility | 35 | 18 | — | June 2022 | |||||||||||||||||||
Other uncommitted factoring facilities (5) | N/A | 29 | N/A | N/A | |||||||||||||||||||
Total off-balance sheet arrangements | $ | 324 | $ | 198 | $ | — | |||||||||||||||||
Total available sources | $ | 1,119 | $ | 201 | $ | 606 |
Statement of Operations Information | Nine Months Ended June 30, 2021 | Year ended September 30, 2020 | ||||||||||||
Net Sales | $ | 1,612 | $ | 1,863 | ||||||||||
Gross profit | 163 | 188 | ||||||||||||
Net income (loss) from continuing operations | (22) | 190 | ||||||||||||
Net income (loss) | (22) | 191 | ||||||||||||
Net income (loss) attributable to Meritor, Inc. | (22) | 191 | ||||||||||||
Balance Sheet Information | June 30, 2021 | September 30, 2020 | ||||||||||||
Current Assets | $ | 479 | $ | 566 | ||||||||||
Non-current Assets | 1,075 | 1,053 | ||||||||||||
Current Liabilities | 499 | 413 | ||||||||||||
Non-current Liabilities | 1,350 | 1,639 | ||||||||||||
Redeemable Preferred Stock | — | — | ||||||||||||
Noncontrolling Interest | — | — |
Assuming a 10% Increase in Rates | Assuming a 10% Decrease in Rates | Change In | |||||||||||||||
Foreign Currency Sensitivity: | |||||||||||||||||
Forward contracts in USD (1) | $ | (2.3) | $ | 2.3 | Fair Value | ||||||||||||
Forward contracts in Euro (1) | (1.2) | 1.2 | Fair Value | ||||||||||||||
Foreign currency denominated debt (2) | 1.0 | (1.0) | Fair Value | ||||||||||||||
Foreign currency option contracts in USD | 0.1 | — | Fair Value | ||||||||||||||
Foreign currency option contracts in Euro | (0.2) | 1.1 | Fair Value | ||||||||||||||
Assuming a 50 BPS Increase in Rates | Assuming a 50 BPS Decrease in Rates | Change In | |||||||||||||||
Interest Rate Sensitivity: | |||||||||||||||||
Debt – fixed rate (3) | $ | (35.6) | $ | 37.7 | Fair Value | ||||||||||||
Debt – variable rate | (0.8) | 0.8 | Cash flow |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||||||
April 1- 30, 2021 | — | $ | — | — | $ | 59,199,494 | ||||||||||||||
May 1- 31, 2021 | 608,578 | $ | 25.13 | 608,578 | $ | 43,907,577 | ||||||||||||||
June 1 - 30, 2021 | 370,034 | $ | 26.18 | 370,034 | $ | 34,219,084 | ||||||||||||||
Total | 978,612 | 978,612 | 34,219,084 |
3-a | |||||
3-b | |||||
22** | |||||
31-a** | |||||
31-b** | |||||
32-a** | |||||
32-b** | |||||
101.INS | Inline XBRL INSTANCE DOCUMENT - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
101.SCH | Inline XBRL TAXONOMY EXTENSION SCHEMA | ||||
101.PRE | Inline XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE | ||||
101.LAB | Inline XBRL TAXONOMY EXTENSION LABEL LINKBASE | ||||
101.CAL | Inline XBRL TAXONOMY EXTENSION CALCULATION LINKBASE | ||||
101.DEF | Inline XBRL TAXONOMY EXTENSION DEFINITION LINKBASE | ||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
MERITOR, INC. | ||||||||||||||
Date: | August 4, 2021 | By: | /s/ | Hannah S. Lim-Johnson | ||||||||||
Hannah S. Lim-Johnson | ||||||||||||||
Senior Vice President, Chief Legal Officer and Corporate Secretary | ||||||||||||||
(For the registrant) | ||||||||||||||
Date: | August 4, 2021 | By: | /s/ | Carl D. Anderson II | ||||||||||
Carl D. Anderson II | ||||||||||||||
Senior Vice President, Chief Financial Officer | ||||||||||||||
Date: | August 4, 2021 | By: | /s/ | Paul D. Bialy | ||||||||||
Paul D. Bialy | ||||||||||||||
Vice President, Chief Accounting Officer |
/s/ Chris Villavarayan | |||||
Chris Villavarayan | |||||
President, Chief Executive Officer |
/s/ Carl D. Anderson II | |||||
Carl D. Anderson II | |||||
Senior Vice President, Chief Financial Officer |
/s/ Chris Villavarayan | ||
Chris Villavarayan | ||
President, Chief Executive Officer |
/s/ Carl D. Anderson II | |||||
Carl D. Anderson II | |||||
Senior Vice President, Chief Financial Officer |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 45 | $ (34) | $ 144 | $ 249 |
Foreign currency translation adjustments: | ||||
Attributable to Meritor, Inc. | 15 | 10 | 48 | (25) |
Attributable to noncontrolling interests | 0 | (2) | 0 | (2) |
Pension and other postretirement benefit related adjustments | 3 | 3 | 8 | 8 |
Unrealized gain (loss) on cash flow hedges | 0 | 0 | 1 | (3) |
Other comprehensive income (loss), net of tax | 18 | 11 | 57 | (22) |
Total comprehensive income (loss) | 63 | (23) | 201 | 227 |
Less: Comprehensive income attributable to noncontrolling interests | (3) | 0 | (7) | (3) |
Comprehensive income (loss) attributable to Meritor, Inc. | $ 60 | $ (23) | $ 194 | $ 224 |
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - shares shares in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common shares issued (in shares) | 104.0 | 103.7 |
Common shares outstanding (in shares) | 71.6 | 72.3 |
Treasury stock (in shares) | 32.4 | 31.4 |
Basis of Presentation |
9 Months Ended |
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Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Meritor, Inc. (the "company" or "Meritor"), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated products, systems, modules and components to original equipment manufacturers ("OEMs") and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction and other industrial OEMs and certain aftermarkets. The Condensed Consolidated Financial Statements are those of the company and its consolidated subsidiaries. In the opinion of the company, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited Consolidated Financial Statements and notes thereto included in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020. The Condensed Consolidated Balance Sheet data as of September 30, 2020 was derived from audited financial statements but does not include all annual disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three and nine months ended June 30, 2021 are not necessarily indicative of the results for the full year. The company’s fiscal year ends on the Sunday nearest September 30, and its fiscal quarters generally end on the Sundays nearest December 31, March 31 and June 30. The third quarter of fiscal years 2021 and 2020 ended on July 4, 2021 and June 28, 2020, respectively. Fiscal year 2020 ended on September 27, 2020. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and June 30 are used consistently throughout this report to represent the fiscal year end and third fiscal quarter end, respectively. COVID-19 Pandemic Update In March 2020, the World Health Organization declared a global health pandemic related to the outbreak of a novel coronavirus. While the COVID-19 pandemic adversely affected our financial performance throughout most of fiscal year 2020 and the beginning of fiscal year 2021, the direct adverse impacts of the pandemic on our operations and financial performance started to dissipate over the course of the third fiscal quarter. All of our facilities have been fully operational since the end of fiscal year 2020 and our salaried employees are returning to work in person, in each case under enhanced safety guidelines. Although we are optimistic that the worst of the pandemic is behind us, the progression of the pandemic, and its direct and indirect impacts on our markets, operations and financial performance, have been unpredictable. As a result of this continued uncertainty, there may still be impacts on our industry, operations, workforce, supply chains, distribution systems and demand for our products in the future which cannot be reasonably estimated at this time.
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Earnings per Share |
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Earnings per Share | Earnings per Share Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share unit awards and convertible securities, if applicable. A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions):
(1) The potential effect of 0.6 million restricted shares and performance share units and 0.7 million shares issuable upon conversion of our convertibles notes are excluded from the diluted earnings per share calculation for the three months ended June 30, 2020 because inclusion in such a period would reduce the loss per share from continuing operations attributable to common shareholders. In November 2020, the Board of Directors approved a grant of 0.3 million performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $26.98, which was the company’s share price on the grant date of December 1, 2020. The Board of Directors also approved a grant of 0.3 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $26.98, which was the company's share price on the grant date of December 1, 2020. The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three-year performance period of October 1, 2020 to September 30, 2023, measured at the end of the performance period. The number of performance share units that vest will depend on adjusted EBITDA margin and adjusted diluted earnings per share from continuing operations (which, solely for purposes of our long-term incentive plan, includes an adjustment for the value of deferred tax assets in jurisdictions with net operating loss carry forwards or tax credits) which are each weighted at 50%. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.3 million performance share units. On December 1, 2020, in response to retention and attrition concerns resulting from the COVID-19 pandemic’s impact on the company’s incentive compensation plans, and to continue to incentivize executive performance in a difficult and uncertain environment, the Compensation Committee of the Board of Directors adjusted the threshold level of the performance metrics required to be achieved for payout for the fiscal 2019-2021 performance cycle. The target and maximum levels were not modified. The impact of this adjustment did not have a material impact on the company's Condensed Consolidated Financial Statements.
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New Accounting Standards |
9 Months Ended |
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Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting standards implemented during fiscal year 2021 On October 1, 2020, the company implemented Accounting Standards Update ("ASU") 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including accounts receivable. The ASU also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The guidance had an impact on the company's accounting policies and procedures related to calculation of allowance for doubtful accounts receivable but did not have a material impact on its Condensed Consolidated Financial Statements. On October 1, 2020, the company implemented ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU add, modify, and eliminate certain disclosure requirements on fair value measurements in Topic 820. The guidance did not have a material impact on the company's Condensed Consolidated Financial Statements. Accounting standards to be implemented Implementation of the following standards may result in a significant change in practice and/or have a significant financial impact on the company. In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Subtopic 815-40). The ASU simplifies the accounting for certain financial instruments with characteristics of debt and equity, including convertible instruments and contracts on an entity’s own equity. ASC 470-20 outlines five models to allocate the proceeds attributable to the issuance of a convertible debt instrument. This ASU removes from U.S. GAAP the separation models for convertible debt with a cash conversion feature (CCF) and convertible debt with a beneficial conversion feature (BCF). As a result of adopting this ASU, entities are not required to separately present in equity an embedded conversion feature in such debt. Instead, they should account for a convertible debt instrument wholly as debt. Applying the separation models in ASC 470-20 to convertible instruments with a CCF or BCF involves the recognition of a debt discount, which is amortized to interest expense. The elimination of CCF and BCF models will reduce reported interest expense and increase reported net income for convertible instruments issued within the scope of those models before the adoption of ASU 2020-06. The amendments in this ASU are required to be adopted by public business entities in fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but not earlier than for a fiscal year beginning after December 15, 2020, including interim periods within those fiscal years. Entities are permitted to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The company is currently evaluating the potential impact of this guidance on its accounting policies and its Condensed Consolidated Financial Statements.
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Revenue |
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Revenue | Revenue Disaggregation of revenue In the following tables, revenue is disaggregated for each of our operating segments by primary geographical market for the three and nine months ended June 30, 2021 and 2020 (in millions).
As of June 30, 2021 and September 30, 2020, Trade receivables, net, which are included in Receivables, trade and other, net, on the Condensed Consolidated Balance Sheet, were $575 million and $421 million, respectively. For the three and nine months ended June 30, 2021 and June 30, 2020, the company had no material bad-debt expense. There were no material contract assets, contract liabilities or deferred contract costs recorded on the Condensed Consolidated Balance Sheet as of June 30, 2021 and September 30, 2020.
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Restructuring Costs |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Costs | Restructuring Costs Restructuring reserves, primarily related to unpaid employee termination benefits, were $5 million at June 30, 2021 and $10 million at September 30, 2020. Restructuring costs are recorded within Other operating expense, net within the Condensed Consolidated Statement of Operations. The changes in restructuring reserves for the nine months ended June 30, 2021 and 2020 are as follows (in millions):
Global Restructuring Programs Fiscal Year 2021: On November 11, 2020, the company approved a restructuring plan to close three U.S. manufacturing plants and one European administration office in its Aftermarket & Industrial segment and consolidate their operations into existing facilities. The site closures include: • Chicago, Illinois • Livermore, California • Livonia, Michigan • Zurich, Switzerland The closures impact approximately 150 hourly and salaried workers. These restructuring plans are intended to optimize the company’s manufacturing footprint, reduce costs and increase efficiencies. With this restructuring plan, the company expects to incur up to $17 million in restructuring charges in the Aftermarket & Industrial segment, consisting of an impact on long-lived assets of $9 million, severance related costs of $5 million and other associated costs of $3 million. During the first nine months of fiscal year 2021, the company incurred $7 million in restructuring costs related to this plan. Restructuring actions associated with this plan are expected to be substantially complete by the end of 2021. Global Restructuring Program Fiscal Year 2020: On June 2, 2020, the company approved and began executing a restructuring plan to reduce labor costs and align with current market forecasts. Under this plan, the company expects to incur approximately $13 million in employee severance costs that affects approximately eight percent of its global salaried positions, and will eliminate certain hourly roles. During fiscal year 2020, the company incurred $10 million in restructuring costs related to this plan of which $7 million was in the Commercial Truck segment and $3 million related to the Aftermarket & Industrial segment. During the first nine months of fiscal year 2021, the company incurred $2 million in restructuring costs related to this plan in the Commercial Truck segment. Restructuring actions associated with this plan are substantially complete.
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Income Taxes |
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Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesFor the three months ended June 30, 2021, and 2020 the company recognized tax expense of $14 million and a tax benefit of $13 million, respectively. This resulted in effective tax rates of 24% and 28%, respectively. For the nine months ended June 30, 2021 and 2020, the company recognized tax expense of $43 million and $73 million, respectively. This resulted in an effective tax rate of 23% for both the nine months ended June 30, 2021 and 2020. |
Accounts Receivable Factoring and Securitization |
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Accounts Receivable Factoring And Securitization [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Factoring and Securitization | Accounts Receivable Factoring and Securitization The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows:
(1) Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $3 million of letters of credit as of June 30, 2021 and $3 million as of September 30, 2020. (2) Actual amounts may exceed the bank's commitment at the bank's discretion. (3) The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2022. (4) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion. Off-balance sheet arrangements Total costs associated with all of the off-balance sheet arrangements described above were $1 million for each of the three months ended June 30, 2021 and 2020. Total costs associated with all of the off-balance sheet arrangements described above were $3 million for each of the nine months ended June 30, 2021 and 2020, and are included in selling, general and administrative expenses in the Condensed Consolidated Statement of Operations.
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions):
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Net Property |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Property | Net Property Net property is summarized as follows (in millions):
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Other Assets |
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Other Assets | Other Assets Other assets are summarized as follows (in millions):
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Other Current Liabilities |
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Other Current Liabilities | Other Current Liabilities Other current liabilities are summarized as follows (in millions):
Compensation and benefits includes the current portion of pension and retiree medical liability, accrued incentive compensation, salary and wages and accrued vacation, holiday and sick leave pay. A summary of the changes in product warranties is as follows (in millions):
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Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Other Liabilities Other liabilities are summarized as follows (in millions):
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Long-Term Debt |
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Long-Term Debt | Long-Term Debt Long-Term debt, net of discounts where applicable, is summarized as follows (in millions):
Redemption of 7.875 Percent Convertible Notes On October 16, 2020, the company issued a notice of redemption for all of the $23 million aggregate principal amount outstanding of its 7.875 percent senior convertible notes due 2026 (the "7.875 Percent Convertible Notes"). As a result of the issuance of the notice of redemption, the 7.875 Percent Convertible Notes were convertible at any time prior to the close of business on November 30, 2020 at a rate of 83.3333 shares of common stock per $1,000 original principal amount of the 7.875 Percent Convertible Notes. All remaining outstanding 7.875 Percent Convertible Notes were surrendered in November 2020 for conversion and were settled in cash up to the accreted principal amount of the 7.875 Percent Convertible Notes and also settled in cash for the remainder of the conversion obligation in excess of the accreted principal amount, in accordance with the provisions of the indenture that governed the 7.875 Percent Convertible Notes. The conversion of the 7.875 Percent Convertible Notes was settled for $53 million, of which $23 million represented principal repayment and $30 million represented the payment of conversion in excess of the accreted principal. There was no loss on extinguishment. As of December 31, 2020, the 7.875 Percent Convertible Notes were fully redeemed. The 7.875 Percent Convertible Notes were classified as current as of September 30, 2020. Redemption of 6.25 Percent Notes due 2024 On December 16, 2020, the company redeemed $275 million of the outstanding $450 million aggregate principal amount of its 6.25 Percent Notes due 2024 (the "6.25 Percent Notes due 2024") for an aggregate purchase price of $287 million (including accrued interest of $6 million). The redemption price was equal to 102.083% of the principal amount of the 6.25 Percent Notes due 2024 redeemed, plus accrued and unpaid interest thereon up to but excluding the redemption date of December 16, 2020. This redemption was accounted for as an extinguishment of debt, and accordingly the company recognized a loss on debt extinguishment of $8 million. The loss on extinguishment is recorded in the Condensed Consolidated Statement of Operations within Interest expense, net. On June 3, 2021, the company redeemed the remaining $175 million principal amount of the 6.25 Percent Notes due 2024 for an aggregate purchase price of $180 million (including accrued interest of $3 million). The redemption price was equal to 101.042% of the principal amount of the 6.25 Percent Notes due 2024, plus accrued and unpaid interest thereon up to but excluding the redemption date of June 3, 2021. The redemption was accounted for as an extinguishment of debt, and accordingly the company recognized a loss on debt extinguishment of $3 million. The loss on extinguishment is recorded in the Condensed Consolidated Statement of Operations within Interest expense, net. 4.50 Percent Notes On December 1, 2020, the company completed the offering and sale of $275 million aggregate principal amount of its 4.50% notes due 2028 (the "4.50 Percent Notes"), including related guarantees by the subsidiaries of the company who from time to time guarantee the company’s senior secured revolving credit facility as it may be amended, extended, replaced or refinanced, or any subsequent credit facility, to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to non-U.S. persons in offshore transactions outside the United States in reliance on Regulation S under the Securities Act in a private placement exempt from the registration requirements of the Securities Act. The net proceeds to the company from the sale of the 4.50 Percent Notes after deducting estimated offering expenses payable by the company were approximately $270 million. The company used the net proceeds from the offering, together with cash on hand, to redeem $275 million of the outstanding $450 million aggregate principal amount of its 6.25 Percent Notes due 2024, as described above. The 4.50 Percent Notes will mature on December 15, 2028 and bear interest at a fixed rate of 4.500% per annum. The company will pay interest on the 4.50 Percent Notes from December 1, 2020 semi-annually, in arrears, on June 15 and December 15 of each year, beginning June 15, 2021. The 4.50 Percent Notes constitute senior unsecured obligations of the company and rank equally in right of payment with its existing and future senior unsecured indebtedness, and effectively junior to its existing and future secured indebtedness to the extent of the security therefor. The 4.50 Percent Notes provide that, prior to December 15, 2023, the company may redeem, at its option, from time to time, the 4.50 Percent Notes, in whole or in part, at a redemption price equal to the sum of (i) 100% of the principal amount of the 4.50 Percent Notes to be redeemed, plus (ii) the applicable premium as of the redemption date on the 4.50 Percent Notes to be redeemed, plus (iii) accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the redemption date) on the 4.50 Percent Notes to be redeemed. The 4.50 Percent Notes provide that, on or after December 15, 2023, the company may redeem, at its option, from time to time, the 4.50 Percent Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 4.50 Percent Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the redemption date) on the 4.50 Percent Notes to be redeemed, if redeemed during the 12-month period beginning on December 15 of the years indicated below:
The 4.50 Percent Notes also provide that, prior to December 15, 2023, the company may redeem, at its option, from time to time, up to 35% of the aggregate principal amount of the 4.50 Percent Notes with the net cash proceeds of one or more public sales of the company’s common stock at a redemption price equal to 104.500% of the principal amount of the 4.50 Percent Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the redemption date) on the 4.50 Percent Notes to be redeemed so long as at least 65% of the aggregate principal amount of the 4.50 Percent Notes remains outstanding after each such redemption and notice of any such redemption is mailed within 90 days of any such sale of common stock. If a change of control (as defined in the ninth supplemental indenture under which the 4.50 Percent Notes were issued) occurs, unless the company has exercised its right to redeem the 4.50 Percent Notes, each holder of the 4.50 Percent Notes may require the company to repurchase some or all of such holder’s 4.50 Percent Notes at a purchase price equal to 101% of the principal amount of the 4.50 Percent Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the repurchase date (subject to the right of holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the repurchase date) on the 4.50 Percent Notes to be repurchased. Revolving Credit Facility On November 9, 2020, the company's senior secured revolving credit facility was increased by $60 million to $685 million through the addition of a new lender. The availability under the senior secured revolving credit facility is subject to a financial covenant based on the ratio of the company’s priority debt (consisting principally of amounts outstanding under the revolving credit facility, the U.S. accounts receivable securitization and factoring programs, and third-party non-working capital foreign debt) to EBITDA. The company is required to maintain a total priority-debt-to-EBITDA ratio, as defined in the credit agreement, of 2.25 to 1.00 or less as of the last day of each fiscal quarter throughout the term of the agreement. Availability under the senior secured revolving credit facility was constrained to $499 million on the last day of the third quarter of fiscal year 2021 due primarily to lower EBITDA in the fourth quarter of fiscal year 2020, which was impacted by the COVID-19 pandemic. The company has full availability until the next measurement point at the end of the fourth quarter of fiscal year 2021. At June 30, 2021 and September 30, 2020, there were no borrowings outstanding under the senior secured revolving credit facility. The senior secured revolving credit facility includes $100 million of availability for the issuance of letters of credit. At June 30, 2021 and September 30, 2020, there were no letters of credit outstanding under the senior secured revolving credit facility. Debt Securities In November 2020, the company filed a shelf registration statement with the SEC registering an indeterminate amount of debt and/or equity securities that the company may offer in one or more offerings on terms to be determined at the time of sale. The November 2020 shelf registration statement superseded and replaced the company's shelf registration statement filed in December 2017. Other One of the company's consolidated joint ventures in China participates in a bills of exchange program to settle its obligations with its trade suppliers. These programs are common in China and generally require the participation of local banks. Under these programs, the company's joint venture issues notes payable through the participating banks to its trade suppliers. If the issued notes payable remain unpaid on their respective due dates, this could constitute an event of default under the company’s revolving credit facility if the defaulted amount exceeds $35 million per bank. As of June 30, 2021 and September 30, 2020, the company had $25 million and $16 million, respectively, outstanding under this program at more than one bank.
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Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments Fair values of financial instruments are summarized as follows (in millions):
The following table reflects the offsetting of derivative assets and liabilities (in millions):
Fair Value FASB guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical instruments (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: •Level 1 inputs use quoted prices in active markets for identical instruments. •Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar instruments in active markets and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. •Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related instrument. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest priority level input that is significant to the valuation. The company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Fair value of financial instruments by the valuation hierarchy at June 30, 2021 is as follows (in millions):
Fair value of financial instruments by the valuation hierarchy at September 30, 2020 is as follows (in millions):
No transfers of assets between any of the Levels occurred during the three and nine months ended June 30, 2021 and 2020. Cash and cash equivalents — All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The carrying value approximates fair value because of the short maturity of these instruments. Short- and long-term debt — Fair values are based on transaction prices at public exchange for publicly traded debt. For debt instruments that are not publicly traded, fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities. Foreign exchange forward contracts — The company uses foreign exchange forward purchase and sale contracts with varying terms that extend through fiscal year 2025 to hedge its exposure to changes in foreign currency exchange rates. As of June 30, 2021 and September 30, 2020, the notional amount of the company's foreign exchange contracts outstanding under its foreign currency cash flow hedging program was $93 million and $65 million, respectively. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. For derivative instruments that are designated and qualify as cash flow hedges, changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Income (Loss) in the statement of shareholders’ equity and is recognized in operating income when the underlying forecasted transaction impacts earnings. Foreign currency option contracts — The company uses option contracts to mitigate foreign exchange exposure on expected future foreign currency-denominated purchases. As of June 30, 2021 and September 30, 2020, the notional amount of the company's foreign exchange contracts outstanding was $24 million and $39 million, respectively. The company did not elect hedge accounting for these derivatives. Changes in fair value associated with these contracts are recorded in cost of sales in the Condensed Consolidated Statement of Operations. The company uses option contracts to mitigate the risk of volatility in the translation of foreign currency earnings to U.S. dollars. As of June 30, 2021 and September 30, 2020, the notional amount of the company's option contracts outstanding was $2 million and $24 million, respectively. These option contracts did not qualify for a hedge accounting election. Changes in fair value associated with these contracts are recorded in the Condensed Consolidated Statement of Operations in other income, net. The fair value of foreign currency option contracts is based on third-party proprietary models, which incorporate inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates and time utilizing market instruments with similar quality and maturity characteristics. Cross-currency swap contracts — The company has utilized cross-currency swap contracts to hedge a portion of its net investment in a foreign subsidiary against volatility in foreign exchange rates. These derivative instruments are designated and qualify as hedges of net investments in foreign operations using the spot method to assess effectiveness. Changes in fair values of the instruments are recognized in foreign currency translation adjustments, a component of other comprehensive income (loss) in the Condensed Consolidated Statement of Comprehensive Income (Loss), to offset the changes in the values of the net investments being hedged. In the third quarter of fiscal year 2019, the company entered into multiple cross-currency swaps with a combined notional amount of $225 million and maturities in October 2022. These swaps hedged a portion of the net investment in a certain European subsidiary against volatility in the euro/U.S. dollar foreign exchange rate. In the second quarter of fiscal year 2020, the company settled these cross-currency swap contracts and received proceeds of $11 million, $1 million of which related to net accrued interest receivable. The fair value of cross-currency swap contracts is based on a model which incorporates observable inputs, including quoted spot rates, forward exchange rates and discounted future expected cash flows, utilizing market interest rates with similar quality and maturity characteristics.
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Retirement Benefit Liabilities |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefit Liabilities | Retirement Benefit Liabilities Retirement benefit liabilities consisted of the following (in millions):
The components of net periodic pension and retiree medical income included in continuing operations for the three months ended June 30 are as follows (in millions):
The components of net periodic pension and retiree medical income included in continuing operations for the nine months ended June 30 are as follows (in millions):
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Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contingencies | Contingencies Environmental Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties. The company has been designated as a potentially responsible party at ten Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s liability has been finally determined. Superfund is a United States federal government program designed to fund the cleanup of sites contaminated with hazardous substances and pollutants. Management estimates the total reasonably possible costs the company could incur for the remediation of the ten Superfund sites at June 30, 2021 to be approximately $22 million, of which $9 million is probable and recorded as a liability. Included in reasonably possible amounts are estimates for certain remediation actions that may be required if current actions are deemed inadequate by the regulators. In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at June 30, 2021 to be approximately $10 million, of which $4 million is probable and recorded as a liability. Included in the company’s environmental liabilities are costs for on-going operation, maintenance and monitoring at environmental sites in which remediation has been put into place. This liability is discounted using discount rates in the range of 0 to 1.50 percent and is approximately $12 million at June 30, 2021. The undiscounted estimate of these costs is approximately $13 million. The following are the components of the Superfund and non-Superfund environmental reserves (in millions):
Environmental reserves are included in Other Current Liabilities (see Note 11) and Other Liabilities (see Note 12) in the Condensed Consolidated Balance Sheet. The actual amount of costs or damages for which the company may be held responsible could materially exceed the foregoing estimates because of uncertainties, including the financial condition of other potentially responsible parties, the success of the remediation, discovery of new contamination and other factors that make it difficult to predict actual costs accurately. However, based on management’s assessment, after consulting with outside advisors that specialize in environmental matters, and subject to the difficulties inherent in estimating these future costs, the company believes that its expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material effect on the company’s business, financial condition or results of operations. In addition, in future periods, new laws and regulations, changes in remediation plans, advances in technology and additional information about the ultimate clean-up remedies could significantly change the company’s estimates. Management cannot assess the possible effect of compliance with future requirements. Asbestos Rockwell International Corporation ("Rockwell") — ArvinMeritor, Inc. ("AM"), a predecessor of Meritor, along with many other companies, has been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos used in certain components of Rockwell products many years ago. Liability for these claims was transferred at the time of the spin-off of the automotive business from Rockwell in 1997. There were approximately 600 and 1,200 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants as of June 30, 2021 and September 30, 2020, respectively. In March 2021, AM entered into a tolling agreement with an asbestos plaintiff's law firm. Under the terms of this agreement, AM agreed to toll the statute of limitations from expiring on asbestos claims in exchange for the plaintiff's law firm agreeing not to raise a claim until there is product identification linking AM. The plaintiff's law firm also agreed to dismiss pending active claims for which product identification was not yet determined. There were approximately 600 claims dismissed as a result of this tolling agreement in the third fiscal quarter of fiscal year 2021. According to the terms of the tolling agreement, if the plaintiff's law firm subsequently links AM's product to the plaintiff, they will refile a claim against AM. A significant portion of the claims do not identify any Rockwell products or specify which of the claimants, if any, were exposed to asbestos attributable to Rockwell products, and past experience has shown that the vast majority of the claimants will likely never identify any of Rockwell products. Historically, AM has been dismissed from the vast majority of similar claims filed in the past with no payment to claimants. For those claimants who do show that they worked with Rockwell products, management nevertheless believes it has meritorious defenses, in substantial part due to the integrity of the products involved and the lack of any impairing medical condition on the part of many claimants. Pending and Future Claims: The company engaged a third-party advisor with extensive experience in assessing asbestos-related liabilities to conduct a study to estimate its potential undiscounted liability for pending and future asbestos-related claims as of September 30, 2020. Management continuously monitors the underlying claims data and experience for the purpose of assessing the appropriateness of the assumptions used to estimate the liability. As of September 30, 2020, the best estimate of the company's obligation for asbestos-related claims over the next 38 years was $78 million. The company recognized a liability for pending and future claims over the next 38 years of $73 million as of June 30, 2021. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Rockwell. Recoveries: AM has insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for a significant portion of these claims. The company recognizes insurance recoveries when the claim for recovery is deemed probable and to the extent an insurable loss has been recognized in the financial statements. The company’s determination is based on analysis of the underlying insurance policies, historical experience with insurers, ongoing review of the solvency of insurers, and consideration of any insurance settlements The insurance receivables for Rockwell asbestos-related liabilities totaled $58 million and $62 million as of June 30, 2021 and September 30, 2020, respectively. The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Rockwell could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Rockwell in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; the company’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the estimation period, the nature of pending claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Rockwell asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations. However, the amount of reasonably possible and estimable losses in excess of the recorded asbestos-related liabilities was determined to be immaterial. Indemnification The company has provided indemnities in conjunction with certain transactions, primarily divestitures. These indemnities address a variety of matters, which may include environmental, tax, asbestos, labor and employment-related matters, and the periods of indemnification vary in duration. The company is not aware of any claims or other information that would give rise to material payments under such indemnification obligations. Other In addition, various lawsuits, claims and proceedings, other than those specifically disclosed in the Condensed Consolidated Financial Statements, have been or may be instituted or asserted against the company, relating to the conduct of the company’s business, including those pertaining to product liability, warranty or recall claims, intellectual property, safety and health, contract and employment matters. Although the outcome of other litigation cannot be predicted with certainty, and some lawsuits, claims or proceedings may be disposed of unfavorably to the company, management believes the disposition of matters that are pending will not have a material effect on the company’s business, financial condition, results of operations or cash flows.
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Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' Equity There were no dividends declared or paid in the first, second or third quarter of fiscal years 2021 and 2020. The payment of cash dividends and the amount of any dividend are subject to review and change at the discretion of the company's Board of Directors. Common Stock and Debt Repurchase Authorizations On July 28, 2021, the Board of Directors authorized the repurchase of up to $250 million of the company's common stock. Repurchases can be made from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company’s debt covenants. On November 7, 2019, the Board of Directors authorized the repurchase of up to $325 million of the company's common stock, which was an increase from the prior $250 million authorization approved on July 26, 2019. Repurchases can be made from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company’s debt covenants. As of the end of fiscal year 2020, the company had repurchased 11.8 million shares of common stock for $266 million (including commission costs) pursuant to this authorization. There were no repurchases in the first or second quarter of fiscal year 2021. During the third quarter of fiscal year 2021, the company repurchased 1 million shares of common stock for $25 million (including commission costs) pursuant to this authorization. As of June 30, 2021, the amount remaining available for repurchases under this common stock repurchase authorization was $34 million. The remaining $34 million, an additional approximately 1.5 million shares, was repurchased in July 2021. On November 2, 2018, the Board of Directors authorized the repurchase of up to $200 million of the company's common stock and up to $100 million aggregate principal amount of any of the company's debt securities (including convertible debt securities), in each case from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company's debt covenants. The remaining authority under the common stock repurchase authorization was superseded by the July 2019 authorization described above. As of June 30, 2021 and September 30, 2020, the amount remaining available for repurchase under this debt repurchase authorization was $76 million. In November 2020, we filed a shelf registration statement with the Securities and Exchange Commission ("SEC"), registering an indeterminate amount of debt and/or equity securities that we may offer in one or more offerings on terms to be determined at the time of sale. Accumulated Other Comprehensive Loss ("AOCL") The components of AOCL and the changes in AOCL by components, net of tax, for the three months ended June 30, 2021 and 2020 are as follows (in millions):
(a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 15 for additional details), which is recorded in other income (expense), net.
(b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 15 for additional details), which is recorded in other income (expense), net. The components of AOCL and the changes in AOCL by components, net of tax, for the nine months ended June 30, 2021 and 2020 are as follows (in millions):
(a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 15 for additional details), which is recorded in other income (expense), net.
(b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 15 for additional details), which is recorded in other income (expense), net.
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Business Segment Information |
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Business Segment Information | Business Segment Information Segment information is summarized as follows (in millions):
(1) Unallocated legacy and corporate income (expense), net represents items that are not directly related to the company's business segments. These items primarily include asbestos-related charges and settlements, pension and retiree medical costs associated with sold businesses, and other legacy costs for environmental and product liability. (2) Amount relates to the one-time recognition of a value added tax credit in Brazil.
(1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. (2) At June 30, 2021 and September 30, 2020, segment assets include $198 million and $154 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 7). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.
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New Accounting Standards (Policies) |
9 Months Ended |
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Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting standards implemented during fiscal year 2021 On October 1, 2020, the company implemented Accounting Standards Update ("ASU") 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including accounts receivable. The ASU also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The guidance had an impact on the company's accounting policies and procedures related to calculation of allowance for doubtful accounts receivable but did not have a material impact on its Condensed Consolidated Financial Statements. On October 1, 2020, the company implemented ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU add, modify, and eliminate certain disclosure requirements on fair value measurements in Topic 820. The guidance did not have a material impact on the company's Condensed Consolidated Financial Statements. Accounting standards to be implemented Implementation of the following standards may result in a significant change in practice and/or have a significant financial impact on the company. In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Subtopic 815-40). The ASU simplifies the accounting for certain financial instruments with characteristics of debt and equity, including convertible instruments and contracts on an entity’s own equity. ASC 470-20 outlines five models to allocate the proceeds attributable to the issuance of a convertible debt instrument. This ASU removes from U.S. GAAP the separation models for convertible debt with a cash conversion feature (CCF) and convertible debt with a beneficial conversion feature (BCF). As a result of adopting this ASU, entities are not required to separately present in equity an embedded conversion feature in such debt. Instead, they should account for a convertible debt instrument wholly as debt. Applying the separation models in ASC 470-20 to convertible instruments with a CCF or BCF involves the recognition of a debt discount, which is amortized to interest expense. The elimination of CCF and BCF models will reduce reported interest expense and increase reported net income for convertible instruments issued within the scope of those models before the adoption of ASU 2020-06. The amendments in this ASU are required to be adopted by public business entities in fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but not earlier than for a fiscal year beginning after December 15, 2020, including interim periods within those fiscal years. Entities are permitted to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The company is currently evaluating the potential impact of this guidance on its accounting policies and its Condensed Consolidated Financial Statements.
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Inventories | Inventories Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) |
Fair Value | Fair Value FASB guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical instruments (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: •Level 1 inputs use quoted prices in active markets for identical instruments. •Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar instruments in active markets and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. •Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related instrument. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest priority level input that is significant to the valuation. The company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
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Environmental | Environmental Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties.
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Earnings per Share (Tables) |
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Schedule of Reconciliation of Basic Average Common Shares Outstanding | A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions):
(1) The potential effect of 0.6 million restricted shares and performance share units and 0.7 million shares issuable upon conversion of our convertibles notes are excluded from the diluted earnings per share calculation for the three months ended June 30, 2020 because inclusion in such a period would reduce the loss per share from continuing operations attributable to common shareholders.
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Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue by Operating Segment | In the following tables, revenue is disaggregated for each of our operating segments by primary geographical market for the three and nine months ended June 30, 2021 and 2020 (in millions).
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Restructuring Costs (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Restructuring Reserves | The changes in restructuring reserves for the nine months ended June 30, 2021 and 2020 are as follows (in millions):
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Accounts Receivable Factoring and Securitization (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Factoring And Securitization [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable Factoring and Securitization | The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows:
(1) Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $3 million of letters of credit as of June 30, 2021 and $3 million as of September 30, 2020. (2) Actual amounts may exceed the bank's commitment at the bank's discretion. (3) The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2022. (4) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion.
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Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions):
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Net Property (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Property | Net property is summarized as follows (in millions):
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Other Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Other assets are summarized as follows (in millions):
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Other Current Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Liabilities | Other current liabilities are summarized as follows (in millions):
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Schedule of Changes in Product Warranties | A summary of the changes in product warranties is as follows (in millions):
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Other Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Liabilities | Other liabilities are summarized as follows (in millions):
|
Long-Term Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long-Term debt, net of discounts where applicable, is summarized as follows (in millions):
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Schedule of Debt Instrument Redemption | Notes to be redeemed, if redeemed during the 12-month period beginning on December 15 of the years indicated below:
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Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Financial Instruments | Fair values of financial instruments are summarized as follows (in millions):
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Schedule of Offsetting of Derivative Assets and Liabilities | The following table reflects the offsetting of derivative assets and liabilities (in millions):
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Schedule of Fair Value of Financial Instruments by Valuation Hierarchy | Fair value of financial instruments by the valuation hierarchy at June 30, 2021 is as follows (in millions):
Fair value of financial instruments by the valuation hierarchy at September 30, 2020 is as follows (in millions):
|
Retirement Benefit Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Retirement Benefit Liabilities | Retirement benefit liabilities consisted of the following (in millions):
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Schedule of Components of Net Periodic Pension and Retiree Medical Income | The components of net periodic pension and retiree medical income included in continuing operations for the three months ended June 30 are as follows (in millions):
The components of net periodic pension and retiree medical income included in continuing operations for the nine months ended June 30 are as follows (in millions):
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Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Environmental Reserves | The following are the components of the Superfund and non-Superfund environmental reserves (in millions):
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Shareholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The components of AOCL and the changes in AOCL by components, net of tax, for the three months ended June 30, 2021 and 2020 are as follows (in millions):
The components of AOCL and the changes in AOCL by components, net of tax, for the nine months ended June 30, 2021 and 2020 are as follows (in millions):
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Schedule of Reclassification Out of Accumulated Other Comprehensive Income |
(a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 15 for additional details), which is recorded in other income (expense), net.
(b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 15 for additional details), which is recorded in other income (expense), net.
(a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 15 for additional details), which is recorded in other income (expense), net.
(b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 15 for additional details), which is recorded in other income (expense), net.
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Business Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information | Segment information is summarized as follows (in millions):
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Schedule of Segment Income Attributable to Parent |
(1) Unallocated legacy and corporate income (expense), net represents items that are not directly related to the company's business segments. These items primarily include asbestos-related charges and settlements, pension and retiree medical costs associated with sold businesses, and other legacy costs for environmental and product liability. (2) Amount relates to the one-time recognition of a value added tax credit in Brazil.
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Schedule of Segment Assets |
(1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. (2) At June 30, 2021 and September 30, 2020, segment assets include $198 million and $154 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 7). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.
|
Earnings per Share - Reconciliation of Average Common Shares Outstanding (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Earnings Per Share [Abstract] | ||||
Basic average common shares outstanding (in shares) | 72.0 | 72.1 | 72.2 | 74.6 |
Impact of restricted shares, restricted share units and performance share units (in shares) | 0.8 | 0.0 | 1.0 | 0.9 |
Impact of convertible notes (in shares) | 0.0 | 0.0 | 0.0 | 0.8 |
Diluted average common shares outstanding (in shares) | 72.8 | 72.1 | 73.2 | 76.3 |
Restricted Stock And Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.6 | |||
Convertible Debt Securities | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.7 |
Restructuring Costs - Changes in Restructuring Reserves (Details) $ in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2021
USD ($)
|
Jun. 30, 2020
USD ($)
|
Sep. 30, 2020
USD ($)
|
|
Restructuring Reserve [Roll Forward] | |||
Beginning balance | $ 10 | $ 8 | $ 8 |
Activity during the period: | |||
Charges | 9 | 27 | |
Cash payments | (11) | (21) | |
Other | (3) | ||
Ending balance | 5 | 14 | 10 |
Less: non-current restructuring reserves | (1) | 0 | |
Restructuring reserves – current | 4 | 14 | |
Employee Termination Benefits | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 10 | 8 | 8 |
Activity during the period: | |||
Charges | 6 | 27 | |
Cash payments | (11) | (21) | |
Other | 0 | ||
Ending balance | 5 | 14 | 10 |
Less: non-current restructuring reserves | (1) | 0 | |
Restructuring reserves – current | 4 | 14 | |
Plant Shutdown & Other | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 0 | 0 | 0 |
Activity during the period: | |||
Charges | 3 | 0 | |
Cash payments | 0 | 0 | |
Other | (3) | ||
Ending balance | 0 | 0 | $ 0 |
Less: non-current restructuring reserves | 0 | 0 | |
Restructuring reserves – current | $ 0 | $ 0 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 14 | $ (13) | $ 43 | $ 73 |
Effective income tax rate, percent | 2400.00% | 28.00% | 2300.00% | 2300.00% |
Inventories (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 138 | $ 119 |
Work in process | 50 | 38 |
Raw materials, parts and supplies | 375 | 278 |
Total inventories | $ 563 | $ 435 |
Net Property (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property at cost | $ 1,538 | $ 1,476 |
Less: accumulated depreciation | (1,032) | (961) |
Net property | 506 | 515 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 33 | 32 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 241 | 228 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 1,057 | 1,002 |
Company-owned tooling | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 162 | 151 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | $ 45 | $ 63 |
Other Assets - Summary of Other Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Other Assets, Noncurrent [Abstract] | ||
Prepaid pension costs | $ 213 | $ 179 |
Deferred income tax assets | 31 | 30 |
Investments in non-consolidated joint ventures | 124 | 107 |
Other | 264 | 269 |
Other assets | $ 632 | $ 585 |
Other Current Liabilities - Summary of Other Current Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|---|
Other Liabilities, Current [Abstract] | |||
Compensation and benefits | $ 121 | $ 91 | |
Product warranties | 18 | 19 | $ 15 |
Other | 149 | 154 | |
Other current liabilities | $ 288 | $ 264 |
Other Current Liabilities - Summary of Changes in Product Warranties (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Sep. 30, 2020 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Total product warranties – beginning of period | $ 54 | $ 50 | |
Accruals for product warranties | 15 | 11 | |
Payments | (11) | (14) | |
Change in estimates and other | (7) | (3) | |
Total product warranties – end of period | 51 | 44 | |
Less: non-current product warranties | (33) | (29) | $ (35) |
Product warranties – current | $ 18 | $ 15 | $ 19 |
Other Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|---|
Other Liabilities Disclosure [Abstract] | |||
Asbestos-related liabilities (see Note 16) | $ 62 | $ 67 | |
Liabilities for uncertain tax positions | 79 | 73 | |
Product warranties (see Note 11) | 33 | 35 | $ 29 |
Other | 99 | 104 | |
Other liabilities | $ 273 | $ 279 |
Long-Term Debt - 7.875 Percent Convertible Notes (Details) |
9 Months Ended | ||||
---|---|---|---|---|---|
Nov. 30, 2020
USD ($)
|
Oct. 16, 2020
USD ($)
|
Jun. 30, 2021
USD ($)
|
Jun. 30, 2020
USD ($)
|
Sep. 30, 2020
USD ($)
|
|
Debt Instrument [Line Items] | |||||
Repurchase of convertible notes | $ 53,000,000 | $ 0 | |||
Loss on debt extinguishment | $ 11,000,000 | $ 0 | |||
7.875 percent convertible notes due 2026 | |||||
Debt Instrument [Line Items] | |||||
Repurchase of convertible notes | $ 53,000,000 | ||||
Convertible Notes | 7.875 percent convertible notes due 2026 | |||||
Debt Instrument [Line Items] | |||||
Interest rate (percent) | 7.875% | 7.875% | |||
Debt | $ 23,000,000 | $ 0 | $ 23,000,000 | ||
Principal amount of convertible notes repurchased | 23,000,000 | ||||
Debt instrument, repurchase amount in excess of accreted principal | 30,000,000 | ||||
Loss on debt extinguishment | $ 0 | ||||
Convertible Notes | 7.875 percent convertible notes due 2026 | Redemption Period One | |||||
Debt Instrument [Line Items] | |||||
Conversion ratio of common stock per principal | 83.3333 | ||||
Principal amount per note for conversion | $ 1,000 |
Long-Term Debt - 6.25 Percent Notes (Details) - USD ($) |
9 Months Ended | ||||
---|---|---|---|---|---|
Jun. 03, 2021 |
Dec. 16, 2020 |
Dec. 01, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Debt Instrument [Line Items] | |||||
Redemption of notes | $ 458,000,000 | $ 0 | |||
Loss on debt extinguishment | $ 11,000,000 | $ 0 | |||
Senior Notes | 6.25 percent notes due 2024 | |||||
Debt Instrument [Line Items] | |||||
Interest rate (percent) | 6.25% | 6.25% | |||
Redemption of notes | $ 175,000,000 | $ 275,000,000 | $ 275,000,000 | ||
Debt | 450,000,000 | $ 450,000,000 | |||
Debt instrument aggregate purchase price | 180,000,000 | 287,000,000 | |||
Debt instrument, accrued interest repurchase amount | $ 3,000,000 | $ 6,000,000 | |||
Debt instrument, redemption price | 101.042% | 102.083% | |||
Loss on debt extinguishment | $ 3,000,000 | $ 8,000,000 |
Long-Term Debt - Revolving Credit Facility (Details) - Revolving Credit Facility |
Nov. 09, 2020
USD ($)
|
Jun. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
---|---|---|---|
Line of Credit Facility [Line Items] | |||
Borrowings outstanding | $ 0 | $ 0 | |
Letters of credit outstanding | 0 | $ 0 | |
Amended Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility increased | $ 60,000,000 | ||
Maximum borrowing capacity | $ 685,000,000 | ||
Priority-debt-to-EBITDA ratio | 2.25 | ||
Current borrowing capacity | 499,000,000 | ||
Maximum limit on issuance, letters of credit | $ 100,000,000 |
Long-Term Debt - Other (Details) - China - Notes Payable to Banks - Other Export Financing Arrangements - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt default, amount | $ 35 | |
Long-term debt outstanding | $ 25 | $ 16 |
Financial Instruments - Offsetting of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Foreign currency option contracts | ||
Derivative Assets | ||
Gross Amounts Recognized | $ 0 | $ 1 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | 0 | 1 |
Foreign exchange forward contracts | ||
Derivative Assets | ||
Gross Amounts Recognized | 1 | 0 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | 1 | 0 |
Derivative Liabilities | ||
Gross Amounts Recognized | 0 | 1 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | $ 0 | $ 1 |
Retirement Benefit Liabilities - Summary of Retirement Benefits (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Retirement Benefits [Abstract] | ||
Retiree medical liability | $ 50 | $ 52 |
Pension liability | 111 | 139 |
Other | 17 | 17 |
Subtotal | 178 | 208 |
Less: current portion (included in compensation and benefits, Note 11) | (12) | (12) |
Retirement benefits | $ 166 | $ 196 |
Retirement Benefit Liabilities - Components of Net Periodic Pension and Retiree Medical Income (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Pension | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | $ (9) | $ (10) | $ (26) | $ (31) |
Assumed return on plan assets | 25 | 23 | 73 | 71 |
Amortization of prior service benefit | 0 | 0 | 0 | 0 |
Recognized actuarial loss | (8) | (8) | (24) | (24) |
Total income | 8 | 5 | 23 | 16 |
Retiree Medical | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | 0 | 0 | (1) | (1) |
Assumed return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service benefit | 9 | 9 | 27 | 27 |
Recognized actuarial loss | (4) | (4) | (10) | (11) |
Total income | $ 5 | $ 5 | $ 16 | $ 15 |
Retirement Benefit Liabilities - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Retirement Benefits [Abstract] | ||||
Non-service cost components of the net periodic pension and OPEB income | $ 13 | $ 10 | $ 39 | $ 31 |
Contingencies - Summary of Environmental Reserves (Details) $ in Millions |
9 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
| |
Environmental Reserves | |
Beginning balance | $ 16 |
Payments and other | (3) |
Accruals | 0 |
Ending balance | 13 |
Superfund Sites | |
Environmental Reserves | |
Beginning balance | 11 |
Payments and other | (2) |
Accruals | 0 |
Ending balance | 9 |
Non-Superfund Sites | |
Environmental Reserves | |
Beginning balance | 5 |
Payments and other | (1) |
Accruals | 0 |
Ending balance | $ 4 |
Business Segment Information - Schedule of Segment Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 3,045 | $ 2,884 |
Reportable Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,682 | 2,324 |
Reportable Segments | Commercial Truck | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,006 | 1,666 |
Reportable Segments | Aftermarket & Industrial | ||
Segment Reporting Information [Line Items] | ||
Total assets | 676 | 658 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | 561 | 714 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Less: Accounts receivable sold under off-balance sheet factoring programs | $ (198) | $ (154) |
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